Cloud Computing in Moscow: From Russia With Love

Russia is coming out of a severe financial dislocation; its economy shrank 7.9 percent in 2009.

It appears to be on a growth track today. Furthermore, its penetration of IT use in the economy is far lower than what we see in the U.S. and western Europe — it can be characterized as an emerging economy, though, if my observations are anything to go by, one with tremendous vitality and ambition.

What that means to the future of data centers is quite intriguing. Unlike the U.S., for example, a much lower percentage of companies in Russia have significant existing data center infrastructure. For many companies, the choice of computing infrastructure presents an interesting greenfield opportunity. The question, therefore, is what path to pursue as companies build out their infrastructure of the future.

A complicating factor is that Russia suffers the challenges of developing economies: reliable electricity and Internet connectivity — although I must say that at the Radisson I am staying at, the (free!) Wi-Fi delivers 13 Mbs down and 9 (!) Mbs up, well beyond what I've ever gotten at any U.S. hotel, at any price. Nevertheless, the power and connectivity challenges make running data centers difficult.

Those challenges argue for keeping a company's data center as close as practicable, to reduce the potential for service interruption. On the other hand, the cost of building a data center has skyrocketed over the past few years, because the sophistication and density of computing infrastructures has increased significantly.

These factors make it difficult to know which alternative makes the most sense:
Build an on-premise data center. This provides less potential for service interruption due to connectivity problems, and, should power go out in some other location in the area, enable the entity to continue compute activities. It does, however, commit a company residing in a less-developed economy to an expensive capital investment and an ongoing capital expenditure regime, as equipment wears out or becomes obsolete and requires replacement.

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Russia not the first to see Skype as a security threat

In partnership with Prime Minister Vladimir Putin's political party, a Russian business lobby group wants to enact "legal safeguards" against foreign VoIP services like Skype and ICQ. Domestic telecom revenue is, of course, a factor, but Russia may be looking to join China in spying on Skype conversations.

VoIP services like Skype and Vonage radically changed the US communication landscape years ago and ignited a telecom race to catch up. The most powerful business lobbying group in Russia, partnering with Prime Minister Vladimir Putin's political party, is hoping to avoid the same fate with "legal safeguards" for home turf competition. Lobbyists also
cite national security concerns, hinting that Russia should join China by spying on conversations over Skype and similar services.

Called the Russian Union of Industrialists and Entrepreneurs (RUIE) the 1,000-member strong business lobby organization recently announced that it wants government restrictions on IP telephony services from foreign countries like Skype and ICQ. RUIE believes that the VoIP
market is now growing faster than traditional telecoms, estimating that by 2012, 40 percent of Russia’s voice conversations will travel through Internet tubes. Unsurprisingly, the group—composed of telecom executives and other members of private and state-run businesses—wants to "protect domestic producers in [the telecom market]," reads a loose Google translation of RUIE’s official statement.

RUIE also warns that "without control by the States, security concerns [will inevitably be riggered]." As Reuters reports, delegates at the meeting state that "it has been impossible
for police to spy on VoIP conversations." Perhaps these statements are red herrings intended to shift focus towards anything but the assault on Russian telecoms’ bottom lines. But these statements touch on the issue of Skype and spying on foreign consumers—after all, the company has done it before.

A server misconfiguration in October 2008 allowed researchers to discover that Skype was providing China with text communication logs. Created in a partnership between Skype and TOM Online, Skype's partner in China, the logs revealed typical things like the monitoring of
"sensitive" topics, but also that specific users were targeted for further monitoring. "Millions" of records found on publicly (and briefly) accessible servers contained IP addresses, usernames, and landline phone numbers, as well as details of users outside of China
who communicated with TOM/Skype users in China.

According to researchers, many of the leaked logs contained none of the typical hot-button topics like Taiwan independence or opposition to the Communist Party of China. Apparently, if you ever talked about flagged topics in China or with one of its residents, you qualify for
TOM/Skype's list of folks to spy on. At the time, an eBay representative would only talk about the
security breach that led to the leaked logs, stating that swift, ironic action will be taken to protect the privacy of these spy logs. When we asked about the RUIE's implications of working with Russia to spy on its citizens, a Skype representative would only say, "Where technically possible, we work with law enforcement."

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